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Monday, April 18, 2016

Of Culture and Business

Over the weekend, the Asheville Citizen-Times published a fascinating analysis of how the deal to lure Deschutes went sideways. If you're interested at the intersection of public policy and business, it's a great piece. But beyond general lessons, there are some particularities that jumped out at me. There were so many moving parts, it's hard to know what tipped the scales in Roanoke's favor, but it looks like culture played a dominant role. Consider:

"The beer culture fit well with what the outdoors tourism officials were
trying to promote, said that city’s economic development director, Wayne
Bowers. 'We’re on the Appalachian Trail. And the Blue Ridge Parkway comes right through town,' Bowers said." All you have to do is pick up a bottle of Deschutes to understand how central the outdoors is to the brewery. It's embedded very deeply into their DNA.

Asheville sold Deschutes' first-choice site, but Deschutes stayed engaged because Asheville is such a beery city.

On the one hand, Deschutes was dealing with this from Ashville: "Republican Commissioner Joe Belcher later would say that his problem with the arrangement was bigger than the land purchase. Belcher said he was opposed to alcohol in general due to 'a deep personal and religious conviction.'"

And if some in Asheville didn't love beer, Virginia was going all out for the deal. The state launched an online campaign that Virginians could participate in, and they got the governor involved in the courting process. And then there was this, which cracked me up. "Those intangibles also included ... the discovery that Haymore and
Deschutes President Michael LaLonde were fellow 'Deadheads....' It was in the middle of one of the Dead’s most well-known tunes 'Franklin’s Tower' that McAuliffe got the handshake from LaLonde that he
wanted, Haymore said."

If you're planning for the next few decades, brewery location isn't a casual consideration. You're stuck with that very expensive property. The natural environment, beer culture, and cultural mores of the city and state will play a huge role in whether the brewery succeeds. One might imagine that sweetening the pot with a few million dollars would make the decision easy, but against these long-term considerations (and an $85 million price tag), location and culture has a lot more to do with it.

East to West?
It's a little surreal to read about how much two states (and South Carolina was an early contender, as well) wanted Deschutes. I absolutely cannot imagine an Oregon city working with local businesses and the governor to try to score a new, say Dogfish Head, Boston Beer, or Yuengling plant. For one thing, Oregon has invested on the front end. The state already brews well over a million barrels of beer a year (not clear whether this stat includes CBA or not). By encouraging breweries with a good regulatory environment, self-distribution laws, and low taxes, Oregon has already developed five of the top 50 largest breweries in the US. Virginia, South Carolina, and North Carolina have developed none.

But of course the bigger thing is that Oregon has such a strong self-identity as a brewing state. We don't import breweries, we build them. We don't drink beer from elsewhere (for good and mostly bad), we drink Oregon beer. I suppose Dogfish Head could set up a brewery here for distribution purposes, but it's hard to envision a scenario outlined in the Citizen-Times playing out here.

All beer is local. That's starting to make things confusing, but only to a point.

Update (9:41am). I meant to add this point. A few people on social media have made the point that one reason for the west-to-east migration of breweries has to do with population densities. West Coast breweries are moving east because that's where the people are, and it's why we're not seeing the reverse. That's true to a point--but only a point. There are a lot of people in the NE, but they're not a giant market. Yet. One of the reasons West Coast breweries grew so fast (fourteen of the fifty largest US breweries) is because there are a lot of people here drinking those beers. Deschutes and Widmer Brothers sell 200,000 barrels of beer in Oregon alone--three times the amount all New Jersey breweries made last year.